Toyota and Microsoft Ink Cloud Telematics Deal

Microsoft and the Toyota Motor Co. have embarked on a strategic partnership on car telematics technologies that will tap into Microsoft's Windows Azure cloud computing platform.

The companies plan to jointly invest a total of 1 billion yen, or about $12 million, in the project, which will involve Microsoft and a Toyota subsidiary, Toyota Media Service Co. The initial goal is to roll out Toyota electric and hybrid cars in 2012 that will enable users of the telematics technology to save on energy costs, both in the car and remotely at home. The long-term goal is for Toyota Media Service to create an overall cloud platform for the delivery of services worldwide by 2015, according to the jointly released announcement.

The deal was announced today by Akio Toyoda, president of the Toyota Motor Corp., and Steve Ballmer, CEO of Microsoft, in a press conference. They both noted the backdrop of destruction in Japan from the recent earthquakes and tsunamis, but Mr. Toyoda said that it was important to proceed and make the announcement nonetheless to assure hope and a steady economic picture for the future.

Toyota and Microsoft have partnered on various technologies for more than 10 years. However, on the telematics side, Mr. Toyoda pointed to Toyota's efforts with a venture-cap Internet service startup called Gazoo, which began in 1998 and which he directed. He said that Microsoft "leant me a helping hand when I was struggling." For this current telematics deal, he called on Ballmer in January of this year to work out the details.

The telematics concept was defined by the companies as the use of telecom and IT technologies in vehicles, including the use of the Global Positioning System satellite network for location tracking-type services and the use of wireless communications for safety applications. The initial goal is to provide power-savings tools for Toyota drivers, such as tracking the best time of day to charge the car, avoiding peak hours and higher electricity costs. The telematics might also be used to turn on air conditioning automatically or control energy systems at home remotely. The system is expected to be controllable via smartphones.

Other scenarios may be considered too, such as coordination with Toyota's entune service, which allows mobile applications to be transferred to the car. Mr. Toyoda said in a Q&A session that the deal with Microsoft may lead to the strengthening Toyota's entune platform.

The availability of the telematics service in 2012 will start in markets where electric and hybrid vehicles are most used, which means the United States and Japan, according to Mr. Toyoda. However, the Windows Azure platform will support 170 counties where Toyota cars are sold, and enable scalability of the telematics service. Toyota will pay for only the services they consume, Ballmer explained.

No details about pricing for the service were announced, but Mr. Toyoda did say that customers likely would shoulder some of the costs. Toyota Media Service is currently conducting trails of the service as part of its Toyota Smart Center program.

Ballmer said that this telematics solution is an example of consumers using a combination of sensor data with remote control, which is becoming a general phenomenon for Microsoft's technologies. He said that the cloud is enabling greater speeds, as well as "a new kind of application."

The press conference was moderated by Thilo Koslowski, a vice president and distinguished analyst at Gartner. He predicted that most consumers "will demand Web-centric connectivity in their cars" by 2016. A recording of the press event can be accessed here.